TYPICAL PORTFOLIO construction

EQUITIES:

US STOCKS

Our domestic stock portfolios typically contain 20-35 equity positions. We believe this strikes the right balance of providing appropriate diversification while not diluting our best ideas. Our clients can expect their portfolio to contain many household names but also some less well-known companies (either because they are smaller companies or operate in more obscure industries).

Collectively, our holdings tend to be somewhat defensive in nature. On the growth-value spectrum, our holdings tend to skew a bit more toward value, but we certainly incorporate growth companies into our portfolios as well.

We do not publicly share our current holdings (as this is information reserved for clients), but the below list is a sampling of companies we either currently own or have owned in the past, to give you some sense of the types of companies we own:

  • Boeing

  • Polaris Industries

  • Costco

  • Berkshire Hathaway

  • Tanger Factory Outlets

  • Enterprise Products

  • Starbucks

  • Bright Horizons Family Solutions

  • Google

  • Union Pacific

  • Blackstone Mortgage Trust

  • Cerner Corp.

  • Delta Airlines

INTERNATIONAL AND EMERGING MARKET STOCKS

We believe that most investors are well-served by having a modest portion of their portfolio invested overseas. We typically invest in mutual funds and ETFs to gain our international exposure, although from time to time, we buy individual stocks and structured products as well. In some situations, we opt to buy "hedged" funds and ETFs which eliminate the currency risk inherent in foreign investments.

ALTERNATIVE INVESTMENTS

We loosely define alternatives as those investments which are not stocks but have the ability to provide stock-like returns. Anytime we have the potential to attain stock market-like returns while diversifying away from stock market risk, we believe this makes sense. At various times, our alternatives category has included investments such as:

  • Commodities

  • Currencies

  • Convertible bonds

  • Option strategies

  • Long/short strategies

  • Insurance-linked securities

  • Hedge fund strategies

FIXED INCOME:

BONDS

We have a substantial portion of our clients' assets invested in the bond market, and this is an area of expertise of ours. We are involved in all aspects of the fixed income market. Portfolios often have at least 12-15 positions to ensure adequate diversification. Our client portfolios typically include the following areas of the bond market, though we emphasize certain areas of the bond market at certain times during the economic cycle:

  • Treasury Bonds

  • Agencies

  • Mortgage-Backed Securities

  • Certificates of Deposit (CDs)

  • Corporate Bonds (Investment Grade and High Yield)

  • Tax-Exempt Municipals

  • Taxable Municipals

  • Preferred Stocks

  • Sovereign Debt

In addition, we often allocate a smaller portion of clients' bond portfolios to more esoteric parts of the market (which we usually access through mutual funds and ETFs in order to ensure adequate diversification and liquidity). These areas include:

  • High Yield/Distressed Debt

  • Corporate Loans

  • Insurance-Linked Securities

  • Non-Agency Mortgage-Backed Securities

  • Structured Credit

  • Emerging Market Bonds

CASH

Our portfolios normally have about 3% invested in cash at any given time, though we may increase this cash position at certain times based on market conditions and the opportunities presenting themselves.